Australian FOREX Daily Outlook 16/01/2007

CURRENCY TRADING SUMMARY –16 JANUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) was largely range bound due to US market being closed for Martin Luther King Day, tight ranges could be set to continue for the next day with no key data releases scheduled until Wednesday. The New York Federal Reserve manufacturing index will be released with expectations centered on 20.00. In other markets, the Crude Oil prices were little changed due to the US Holiday. Crude Oil fell by US24c to US$52.75 a barrel. There were further comments by the Kuwaiti Oil Minister who said that OPEC could hold an emergency meeting if oil prices fell further, however they would prefer to wait until the scheduled meeting on Feb 1^st.

• The Euro (EUR) traded within a range of 1.2915 to 1.2957, before closing at 1.2937 in the New York session. Looking ahead the market awaits the key data release of the German ZEW survey. The market expects a release of approximately -10.0.

• The Japanese Yen (JPY) traded within a range of 120.07 to 120.61, before closing at 120.43 in the New York session. Expect this range to continue ahead of the BoJ monetary policy meeting scheduled for Wednesday with the market divided on whether interest rates will rise as a result.

• The Sterling (GBP) continued to hold on to its recent gains, trading within a range of 1.9571 to 1.9669, before closing at 1.9648 in the New York session. Data continues to be positive with the UK PPI coming in at above expectations. Focus will now turn to the UK CPI due to be released later today. The market is looking for 0.4% increase on a monthly basis, taking the annual rate to 2.7%.

• The Australian Dollar (AUD) traded within a range of 0.7831 to 0.7860, before closing at 0.7836 in the New York session.

• Gold (XAU) largely unchanged trading in a range of 625.10 to 628.25.

TECHNICAL COMMENTARY

• Euro 1.2935

Initial support at 1.2865 (Jan 12 low) followed by 1.2821 (61.8% retracement of the 1.2483 to 1.3368 advance). Initial resistance is now located at 1.3016 (Jan 11 reaction high) followed by 1.3054 (Jan 9 high and key intraday resistance).

• Yen 120.40

Initial support is located at 119.70 (Former resistance from Jan 3rd) followed by 119.14 (Jan 10 low). Initial resistance is now at 120.74 (Jan 12 trend high) followed by 121.07 (Dec 12, 2005 high).

• Pound – 1.9625

Initial support at 1.9426 (Jan 12 low) followed by 1.9316 (Jan 10 corrective low). Initial resistance is now at 1.9753 (Jan 3 reaction high) followed by 1.9849 (Dec 1^st 2006 high).

• Australian Dollar – 0.7825

Initial support at 0.7759 (Jan 10 low) followed by 0.7732 (Nov 24, 2006 low). Initial resistance is now at 0.7871 (50% retracement of the 0.7982-0.7759 decline) followed by 0.7897 (61.8% retracement of the 0.7982-0.7759 decline).

• Gold – 627

Initial support at 610.0 (Jan 12 low) followed by 602.2 (Jan 5 corrective low). Initial resistance is now at 627.7 (Jan 12 high) followed by 645.0 (Jan 3 reaction high).